States have many questions on Medicaid expansion

By The Associated Press | January 28, 2013 | 12:33 PM EST

As state legislative sessions advance, lawmakers are debating whether to expand their Medicaid programs as provided by President Barack Obama's health care law. It could be one of the most important decisions this year. So far 17 states and the District of Columbia have signaled they will go ahead, while 11 states are refusing. The rest are weighing options.

Some questions and answers:

Q: What is Medicaid?

A: Medicaid is a safety-net program envisioned as a partnership between the federal government and the states to cover low-income people, from severely disabled patients to healthy children and some parents. Since the 1960s, it has grown to a $400 billion-plus program, covering nearly 60 million people in the United States, or about 1 in 5. Some 30 million Medicaid beneficiaries are children, but the program also pays nursing home bills for low-income seniors and disabled people. Medicaid rules and coverage policies are different in every state. Nationally, the federal government's share of the cost averages nearly 60 percent.

Q: How does Obama's Affordable Care Act change Medicaid?

A: The health care law opened the program up to low-income adults with no children at home. Before that, states wanting to serve this group had to pay for it with their own money, and few states could afford it. Starting Jan. 1, 2014, the new law expands Medicaid eligibility to people making up to 138 percent of the federal poverty line, or about $15,400 for an individual. The Supreme Court gave states the right to refuse the Medicaid expansion without jeopardizing the rest of their program money. About half the people gaining coverage under the new law would so through Medicaid.

Q: What is the federal government offering my state?

A: Under the law, Washington will pay the full cost of the expansion the first three years, from 2014-2016. Thereafter, the federal share gradually phases down to 90 percent, still way more than the government pays for the rest of Medicaid. The nonpartisan Urban Institute estimates that $76 billion in state spending can trigger $952 billion in federal dollars over a decade.

Q: What are some arguments for the Medicaid expansion?

A: The program will provide coverage to millions of low-income people, most of whom are working and paying taxes that support other government health care programs, such as Medicare. Scholarly studies have shown that Medicaid coverage does improve access to medical care and people report they are in better health and not as worried about bills.

Hospitals, which by law must provide emergency care to the uninsured, will get an important new source of money to offset the cost of charity care. The financing will allow hospitals to add jobs, and will also have a positive economic impact on dozens of other businesses in local communities.

Low-income childless adults are the main beneficiaries of the expansion. A few states that cover them already will save money because the federal government will pick up costs those states have been bearing. Low-income parents not currently covered will also benefit.

Q: What are some of the arguments against the Medicaid expansion?

A: A federal government awash in debt can't be trusted to keep its promises. States that expand coverage will be hard pressed if Washington later tries to scale back its financial commitment. It won't be easy to simply pull the plug on the expansion because people will be depending on the coverage. States could get hit with a cost shift.

Washington passed up the opportunity to overhaul Medicaid's convoluted rules and give states more flexibility with the program. Medicaid is a major share of the budget in every state, forcing wrenching decisions between health care and other state priorities such as education and law enforcement. Even if states pay only a fraction of the cost, that is still real money.

Q: Any other concerns for states?

A: Yes.

It's estimated that even before Obama's health care law, millions of people were eligible for Medicaid but were not signed up.

With the new requirement in 2014 that virtually all Americans have health insurance, states fear these low-income people will come out of the woodwork and enroll to comply with the mandate.

It will be an issue in every state, even the ones that reject Obama's Medicaid expansion.

The cost of covering what state officials are calling the "woodwork population" will be divided up under standard federal matching rates, not the more generous one provided in the health care law.

Q: How is this debate likely to shake out?

A: So far mainly Democratic-led states are signing up for the expansion. But some states with Republican governors have also accepted it, and others red states are actively considering it. All the states declining the option are led by Republicans.

If the past is any guide, some states will not sign up for the expansion by 2014. But over time, experts say it's likely that all states will accept it.